Pretoria - Listed Growthpoint Properties has launched its expansion strategy into central and eastern Europe (CEE) by investing 186.4 million euros (R2.8 billion) in a Romanian-based real estate developer, owner and manager.
The company on Thursday confirmed that it would subscribe for an initial 26.9 percent stake in London Stock Exchange Alternative Investment Market listed Globalworth Real Estate Investment, the largest owner of office space in Romania.
It said this was a conservative market entry point in a transaction expected to be accretive to its distributions.
The transaction is subject to the usual conditions precedent, including approvals from the SA Reserve Bank and Globalworth’s shareholders.
However, irrevocable commitments in favour of the transaction have been received from Globalworth shareholders holding more than 75 percent of shares in issue.
Norbert Sasse, the chief executive of Growthpoint, said it had taken it some time to find the right partners and expertise to create a powerful platform for high-growth CEE property investment but was thrilled to embark on this partnership with Globalworth as an established, high-quality, real estate business.
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“We look forward to being part of its phenomenal growth story, to the benefit of our shareholders and investors.
“We believe Globalworth represents a suitable investment strategy for Growthpoint to access opportunities in CEE real estate markets,” he said.
Concentrated
Globalworth has property portfolio valued at e1bn that included mostly modern A-grade offices, industrial properties, a residential complex, as well as developments. Its portfolio is concentrated in Bucharest in Romania and underpinned by euro-denominated leases with multinational business brands.
Globalworth is internally managed by a 70-strong professional team led by chief executive, Ioannis Papalekas, who is the founder of the business and will continue to own 25.7 percent of the enlarged share capital of Globalworth.
Papalekas said Growthpoint’s significant capital injection into the company would provide the key to unlocking exciting new growth, strategies and prospects for the company.
Papalekas said they were delighted to welcome Growthpoint as a major strategic shareholder. “We believe that this transaction will transform our business and we look forward to working together with Growthpoint towards creating one of the leading institutional real estate investors in the region,” he said.
Growthpoint’s subscription for the initial 26.9percent stake in Globalworth is less than the mandatory offer threshold of 30percent and will be funded in euros.
In terms of the transaction, Globalworth has agreed to issue Growthpoint a further 1 million fully paid up fee shares by end December next year, thereby increasing Growthpoint’s stake in the enlarged share capital of Globalworth to 25.3 million shares or 27.7 percent.
Shares dropped 1.53 percent on Thursday to close at R24.50.